Enforce new extractive industries law, govt told

Dar es Salaam. Campaigners have raised concerns over a delay in enforcing Tanzania’s Extractive Industries (Transparency and Accountability) Act, 2015 that requires making public mineral and oil contracts and concessions.

Speaking to The Citizen in separate interviews, members of civil society organisations (CSOs) say despite the country’s promising progress to ensure extractive companies embrace transparency and accountability, no contract has been officially disclosed to the public. Ms Jovitha Mlay, campaign manager at Oxfam Tanzania, states: “Natural resources are collectively owned by the citizens and are managed by the government. The deals that the government signs on its citizens’ behalf need to be accessed by public so that they understand what the government has negotiated and entered into.

“With disclosures, there will be an increased trust by the citizens to the government, with less speculation. Again, if the government discloses the contracts, there will be low chances of politicians to use the missing information in the public domain for political gains. Disclosure of contracts is good for government and it attracts credible and efficient investors.”

Moreover, according to her, although the government has been implementing various strategic plans to improve the extractive sector, the country is yet to fully benefit from the negotiated deals. She called on the Ministry of Energy to renegotiate the deals with a view to ensure the country earns its sufficient shares.

“It is high time the contracts were made public so that citizens understand how they can support. The notion that citizens cannot understand what is in the contracts is not valid at this moment, as there are intellectuals, CSOs and individuals who can translate them for public consumption. The re-negotiation will also be an opportunity for public to decide how they would like to move forward with their resources and on what terms.”

The co-director of Natural Resource Governance Institute (NRGI) in Africa, Mr Silas Olan’g, states: “Contractual transparency is essential for responsible management of natural resources and the potential for growth and economic development that those resources can provide. When governments and companies agree to exploit publicly owned natural resources, citizens have the right to know the terms of the resulting deals. These terms are contained in licences, contracts, regulations and legislation.”

According to Mr Olan’g: “Without contractual transparency, fears of the worst flourish, and mistrust and conflict are magnified among stakeholders. It is undemocratic for these contracts to be kept secret. Contracts are essentially the law of a public resource project, and a basic tenet of the rule of law is that laws shall be publicly available.”

The coordinator of Hakirasilimali Tanzania, Ms Racheal Chagonja, says: “According to the constitution, resources in Tanzania are primarily for the benefit of the citizens, hence citizens are the ultimate holders of their natural resources. They need to be actively involved in the entire extractive value chain from the decision to extract to the decision on how the revenue is spent.

“For a long time now, contractual disclosure or transparency has remained critical and an unreciprocated mystery. Inaccessibility to such contracts, limits citizens’ access to information, narrows their sense of ownership of their natural resources and decreases their ability and motivation to scrutinise.”

CSOs are dissatisfied with the way the terms of the extractive projects are bound as a number of citizens are deprived of accessing the terms of the contracts. In closed-door negotiations, multibillion-dollar deals spanning decades are made between company heads and select government officials. However, neighbouring communities living near pipelines carrying millions of barrels of oil, or open pit mines generating billions in revenues, often have no knowledge of the details of projects, and often do not reap any benefits.

Progress in Tanzania

Beginning in 2010, Tanzania discovered natural gas offshore in quantities potentially transformative for the economy. Estimates indicate that the country has 57 trillion cubic feet of natural gas.

Despite such wealth potential, many Tanzanians continue living in poverty. Recent estimates put the number of those living below the poverty line at 12 million, or a quarter of the population.

Poverty has persisted despite relatively stable growth of the economy averaging 7 percent, for the last five years.

However, some progress has been made already, as President John Magufuli endorsed the recommendation for disclosure of extractive contracts as put forward by first Presidential Mining Committee to investigate copper concentrates, among others.

Government response

The permanent secretary in the Ministry of Energy, Dr Hamisi Mwinyimvua, on September 13 stated: “Of course, oil and gas contracts are overseen by the Ministry of Energy. But most of these contracts have a confidentiality clause. Maybe after review and renegotiations.”

When reached for further comments on the matter, the permanent secretary in the Ministry of Minerals, Prof Simon Msanjila, said the government was formulating comprehensive regulations for full implementation of the Extractive Industries (Transparency and Accountability) Act.

“Of course, we will consult stakeholders including CSOs in the country to formulate the regulations governing the extractive industries in the country. No one will be left behind,” he said over phone. The acting director general of the Petroleum Upstream Regulatory Authority, Mr Charles Sangweni, told The Citizen via telephone: “Not all information in the contracts is supposed to be made public. Some of the information is confidential for the betterment of the government.

“What is more important is that we make sure that the contracts benefit the country by considering a win-win criterion when signing them with investors.”

The acting managing director of Tanzania Petroleum Development Corporation, Mr Kapuulya Musomba, says: “The Tanzania Extractive Industries Transparency and Accountability Act, 2015 demands that all new concessions, contracts and licences be made available to the public. Therefore, all extractive companies in the country are obliged by the law to disclose the contracts to the public.”

The acting general secretary of the Tanzania Extractive Industries Transparency Initiative (EITI), Ms Mariam Mgaya, says the organisation is committed to reinforce the law, citing that the entity was currently collaborating with the government authorities to formulate regulations that will govern contract disclosures in extractive industries.

Contractual disclosure survey

The survey provides a snapshot of the current landscape of corporate policy based on a survey of public policies and commitments by 40 leading oil, gas and mining companies. The survey was implemented by Oxfam America on May 2018.

Among others, the survey findings indicated that almost half of the companies assessed (18/40) had made statements in support of contract disclosure. Half are oil and gas companies and half are mining companies.

In parallel, a range of international institutions have led the charge in endorsing and requiring contract disclosures in the oil, gas and mining sectors after recognising the significant governance risks created by contract secrecy.

For example, the United Nations 2010 Principles for Responsible Contracts include disclosure to ensure that communities benefit.

The Extractive Industries Transparency Initiative amended its 2013 standard to require implementing countries to document their policy on contract disclosure and to encourage countries to disclose contracts to the public.

EITI is being implemented by more than 50 countries.

Extractive companies’ views on contract disclosure norm

Given the requirements of the EITI standard, it is a high priority for corporate EITI board members and supporting companies to actively support contract disclosure and make their positions clear and public.

“Equinor respects the position of any government in the countries where we operate with regards to whether the contracts are made publicly available or not. Likewise, we support the position of the government of Tanzania,” says Mr Erik Haaland, spokesperson of the Equinor ASA Company.